The Volkswagen Scandal was an expensive mistake for the company. For the first time in 15 years, Volkswagen faced financial losses for three months ending September 2015.

It wasn’t lost sales that hit the finances. After all, the scandal erupted only at the very end of the period. The reason for the loss is that Volkswagen Group has set aside £4.8bn to cover recalls. But it admits the costs will be much greater: this provision has nothing included for possible fines or compensation claims by owners.

 

 

The only option for such problem is to recall the vehicles to fit in SCR catalysts. This is very expensive process because there are more than 11 million cards out on market that are affected with this issue. Volkswagen Group had decided to set aside as £4.8bn to cover the costs to fit in SCR catalysts. However, the Group estimates that the costs would go up to a staggering £7bn. As per few reports, It is told that installing SCR catalysts in some particular models are very expensive that its not feasible, so the company is considering a buy back from the consumers.

As of today, Volkswagen Group had paid almost £10bn in buy backs after they found fixing cars is very much difficult as they don’t have provisions for the tanks used in SCR catalysts.

Volkswagen Group had opted to unethically modify engines just to avoid investment on engines. The company ended up paying lots more than the sum of its 2 year profits and it also lost brand value.

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